| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : MARVELLE INVESTMENTS PTY LTD and ARGYLE HOLDINGS PTY LTD [2010] WASAT 125 (S) MEMBER : JUSTICE J A CHANEY (PRESIDENT) MR C RAYMOND (SENIOR MEMBER)
MR M ANDERSON (SENIOR SESSIONAL MEMBER)
HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 7 SEPTEMBER 2010 SUPPLEMENTARY
DECISION : 25 NOVEMBER 2010 FILE NO/S : CC 777 of 2009 BETWEEN : MARVELLE INVESTMENTS PTY LTD Applicant
AND
ARGYLE HOLDINGS PTY LTD
TEGRA PTY LTD
BANTOY PTY LTD
BIRKAI PTY LTD
YOUSSA PTY LTD
ROSEMAC PTY LTD
MICHELA FINI
Respondent
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Catchwords: Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) Application for costs Principles to be applied in the exercise of discretion Effect of offer to compromise not complying with Rules - Manner of assessment of costs Legislation: Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
Legal Practitioner's (State Administrative Tribunal) Determination 2008
Legal Practitioners' (Supreme Court) (Contentious Business) Determination 2008
State Administrative Tribunal Act 2004 (WA), s 9, s 32(5), s 83, s 83(1), s 87, s 87(1), s 87(2), s 92
State Administrative Tribunal Regulations 2004 (WA), reg 9
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42(2), r 43 Result: Application for costs granted Category: A
Representation: Counsel:
Applicant : Ms M Chua
Respondent : Mr RE Lindsay and Mr R McCallum
Solicitors:
Applicant : Summerslegal
Respondent : McCallum Donovan Sweeney
Case(s) referred to in decision(s):
Ampezzo Pty Ltd and Franken [2009] WASAT 109 (S)
Chew and Director General of the Department of Education and Training [2006] WASAT 248
Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135
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Head and Zimmermann Investments Pty Ltd [2009] WASAT 61 (S)
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125
Pearce & Anor and Germain [2007] WASAT 291 (S)
Summerville and Department of Education and Training & Ors [2006] WASAT 368
Vasilou v Australia's Country Homes Pty Ltd [1999] VSC 462
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 The Tribunal considered the applicant's application for costs in complex proceedings conducted under the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) in which the time related costs and disbursements recorded amounted, on the Tribunal's calculation, to $282,740.23 and a preliminary bill of costs, claimed on a party and party basis, amounted to $213,112.87. The Tribunal had directed that it would deal separately with the principle of whether costs should be awarded, and if awarded, would thereafter issue directions to enable the quantum of costs to be finalised. 2 The parties' submissions reflected an opposing approach to the application of the cost principles applicable in commercial tenancy matters as expressed in Pearce & Anor and Germain [2007] WASAT 291 (S) and also as to the basis upon which the quantum of costs could be determined. The Tribunal concluded that the parties had read and applied those cost principles too restrictively. The Tribunal held that the importance of the matter to the applicant, and its complexity, was far from the ordinary commercial tenancy case run before the Tribunal and that those factors, together with the extent of the time recorded costs, the party and party costs claimed, and the circumstance that the respondent had endeavoured to have the proceedings transferred to the Supreme Court were factors which could justify moving away from the starting position that each party should pay their own costs. 3 The Tribunal considered a number of other bases on which a costs award was opposed. The Tribunal concluded that all fees, including counsel and witness fees, should be reduced by 5% to allow for issues on which the applicant had been unsuccessful. It was also necessary to consider the effect of various offers to settle which had been made in forms which did not comply with the State Administrative Tribunal Rules 2004 (WA). Notwithstanding that noncompliance, the Tribunal indicated that it was appropriate to have regard to the offers, but concluded that in each case it was not unreasonable to have not accepted the offer. In the circumstances, the Tribunal concluded that costs should be awarded to the applicant subject to the above-stated reduction. 4 The Tribunal also concluded that it was appropriate to use the Legal Practitioners' (State Administrative Tribunal) Determination 2008 and the Legal Practitioners' (Supreme Court) (Contentious Business) Determination 2008 as guides to the determination of costs as there is no (Page 5)
prescribed party and party scale of costs applicable to the State Administrative Tribunal. 5 Directions were then issued to enable the quantum of costs to be finally determined, if the parties were unable to agree the same, based on the observations contained in the reasons for decision.
The claim for costs 6 In the original substantive decision, Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (substantive decision), the Tribunal explained (at [11]) that the group of companies and the individual who, together, are the landlord would be referred to as the respondent. That form of citation has been followed throughout the proceedings and is also used in these reasons for decision. 7 The substantive decision, published on 7 September 2010, determined a complex commercial tenancy dispute between the parties. The hearing occupied some seven days. The orders made by the Tribunal required that any application for costs be made on or before 27 September 2010 by filing and serving a written submission setting out fully the basis upon which it is contended costs should be awarded. The applicant, which on any measure was the substantially successful party in the proceedings, lodged an application for costs with the Tribunal on 24 September 2010 and served a copy of that application on the other party on 28 September 2010. The Tribunal's order stipulated that failing application in accordance with the order, the matter shall be considered finalised on the basis that each party bears its own costs. It was also directed that, subject to further order of the Tribunal, any costs application shall be determined on the documents. 8 The costs application is supported by the affidavit of Ms Mabel LaiFun Chua who has the conduct of the proceedings on behalf of the applicant. Attached to the affidavit is a printout of a transaction report in respect of this matter which reflects the applicant's solicitor's time recorded for each fee earner, the rate charged for all attendances and the amounts charged, totalling $145,562, exclusive of GST. The total with GST is $160,118.20. The printout includes charges for emails, photocopying, printing and courier charges, totalling $10,882.07. Invoices from counsel are also attached to the affidavit and total some $87,197. Also attached to the affidavit are accounts from the accounting firm Grant Thornton, which provided the applicant's expert witness, Mr Vibert. The fees of Grant Thornton (Page 6)
total $23,454.75. The total timerelated costs and disbursements recorded amount to $282,740.23. 9 A document headed 'Preliminary Bill of Costs' is also attached to the affidavit of Ms Chua and reflects the costs claimed by the applicant as between party and party. This is made clear at para 11 of the applicant's outline of submissions in support of the application for costs which was filed at the same time. The total fees and disbursements so claimed amount to $213,112.87.
Constitution of the Tribunal 10 For the purposes of determination of the costs application, the Tribunal has been reconstituted to include Justice Chaney, the President of the Tribunal. This course has been followed due to the resignation of Member J Hawkins and because of the potential presented by this costs application for some clarification to be given concerning the application of the cost principles established in Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce).
The status of the costs application 11 The respondent initially raised as an issue that the cost application had only been served on 28 September 2010. The applicant responded indicating that, as Monday, 27 September 2010 was a public holiday, it contended that service had been validly effected on 28 September 2010. 12 In the circumstances, the Tribunal gave the parties, and more particularly the respondent, an opportunity to make any submissions if it was opposed to the Tribunal correcting its order under s 83(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). If the Tribunal had been aware that 27 September 2010 was a public holiday at the time it made the order, it would not have selected that date as the last day for filing and service of the application. The respondent has informed the Tribunal by letter dated 26 October 2010 that the respondent accepts that the application for costs has been served within the terms of the Tribunal's order. In the circumstances, the Tribunal has proceeded to deal with the costs application on that basis. 13 It is also noted that the applicant appears to have gone further than necessary in providing all of the material referred to above in support of its application for costs. At [175] and [176] of the Tribunal's reasons for decision in the substantive decision, the Tribunal explained the approach that it was taking in relation to costs, and that, in the circumstances, (Page 7)
it considered it appropriate, if an application was to be made for costs, that the Tribunal determine, first, as a matter of principle, whether costs should be awarded. Further, that if costs were awarded, further directions might then issue to enable the successful party to provide sufficient details of the costs claimed, the rates charged and the work undertaken to enable the Tribunal to assess the amount of costs to be allowed. 14 The applicant's reference to a preliminary bill of costs appears to be consistent with the Tribunal's intention. However, at para 11 of the applicant's outline of submissions and following, detailed submissions are made in relation to the quantum of costs expressed to be claimed by the applicant. The respondent, in turn, has addressed the quantum of costs at [24] and in the following paragraphs of its opposing submissions. The respondent did, however, go on also to make submissions concerning why costs, if awarded, should be taxed by the Tribunal. Those submissions may be consistent with the approach which the Tribunal indicated it intended to take, and it may therefore be unsafe to assume that the respondent might not wish to make further submissions, in the event that it is determined that costs should be awarded to the applicant. The Tribunal will therefore proceed as originally intended.
Application of the legal principles relevant to an award of costs 15 The Tribunal's approach to costs, particularly with reference to commercial tenancy matters, is as formulated in Pearce. Both parties have relied upon the following passage at [24] in that decision. In my view, the approach that should be taken to costs in proceedings under the CTRSA Act should reflect the approach explained by Barker J in Summerville. That is consistent with the reliance by the Tribunal in Bilek on the proposition drawn from Australia's Country Homes, that decisions on costs might serve to promote certainty and responsibility in parties to their contractual responsibilities. That does not mean that there is a presumption that costs will follow the event. Rather, where it is necessary for a party to a retail shop lease to take proceedings in the Tribunal to vindicate its clear contractual entitlements, and to incur costs in doing so, it will 'often not be unreasonable for an award of costs to be made'. The position is the same where costs are incurred in defending an obviously unmeritorious claim. Where, however, there is a genuine dispute between the parties to a lease, their respective rights are unclear and one or both seek determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs, unless there are circumstances of the type identified in Chew. 16 The applicant in its written submissions in support of the costs application endeavours to bring the case, or particular aspects of it, (Page 8)
within some of the clearly recognised circumstances identified in Pearce when costs may be awarded. Each of the heads under which the applicant has based its case for the award of costs is addressed in turn.
Conduct of the respondent and its auditor generally 17 The applicant submits that the conduct of the respondent and its auditors leading up to and during the proceedings was unreasonable and inappropriate. Reliance is placed upon the Tribunal's criticism of the manner in which the respondent's auditor allowed his elevated level of suspicion to cloud his proper judgment. 18 Notwithstanding that the Tribunal found that the applicant's auditor had committed an error of judgment, it found that the respondent had not acted unreasonably or other than in good faith. Further, the Tribunal found that: [t]he less than fully cooperative attitude exhibited by the tenant, and in particular the narrow and incorrect view taken about the type of records to which the landlord was entitled to access in order to carry out the audit, the opposition to the proceedings in the Supreme Court coupled with Mr Weed's report identifying a risk of manipulation of the database, together with the gross profit anomalies identified by Ms Lucchese in respect of particular products, were certainly enough to justify a healthy level of suspicion on the part of the landlord. 19 It is not accepted that the conduct of the respondent or of its auditor generally provides a proper basis upon which to award costs in favour of the applicant.
Respondent's conduct in respect of the interim application and crossapplication for transfer of proceedings 20 The circumstances of the application by the applicant for interim relief and the crossapplication by the respondent for the transfer of the proceedings has been examined and full account taken of the detailed written submissions made by the applicant. 21 The view of the Tribunal is that both parties acted appropriately in the protection of their respective interests. There is nothing particularly untoward about the conduct of the respondent. It is clear that the respondent was not prepared to give an undertaking not to reenter the leased premises unless there were proceedings on foot which would ensure that the dispute between the parties could be resolved. The respondent was entitled to adopt the position that it was more appropriate for the matter to be dealt with by the Supreme Court. (Page 9)
22 It is noted that the respondent submits that any application for costs in respect of the above interlocutory proceedings should have been made before Member Hawkins at the relevant time and that as the application for an interim injunction was dismissed, no costs should be awarded. 23 There is no particular practice or procedure prescribed under the SAT Act or the enabling Act, in this case the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), which prescribes the procedure to be followed by the Tribunal dealing in particular with the time at which any cost order might be made in relation to interim orders. Consequently, pursuant to s 32(5) of the SAT Act, the Tribunal may determine the procedure to be followed in a particular case. 24 It is desirable that any application for costs of interlocutory proceedings be dealt with at the time of determination of those proceedings. However, the Tribunal is known to be generally a costfree jurisdiction and costs are not always at the forefront of parties' minds during the early stages of proceedings. It is desirable, therefore, to maintain flexibility and that is best done by being able to entertain an application for costs at any stage in the proceedings. 25 The costs of the application for injunction and the crossapplication for transfer of the proceedings should be dealt with as costs in the cause of the proceedings which will follow the Tribunal's decision whether or not to award costs.
Respondent's conduct in respect of the trading hours issue 26 The applicant relies upon an offer to settle made by letter dated 19 January 2009. The settlement offer is marked without prejudice, save as to costs in the traditional Calderbank form, but does not comply with the requirements of r 41 of the State Administrative Tribunal Rules 2004 (Rules). That requirement is that an offer be open for a specified period and that the period be for a minimum of 14 days. If an offer complies with r 40 and r 41 of the Rules, then r 42(2) compels the Tribunal, in determining the costs that may be awarded, to take into account that a party did not accept an offer more favourable than the Tribunal's order. The effect of noncompliance with the Rules is that the Tribunal is not obliged to have regard to the offer of settlement and its nonacceptance on the above basis. However, it is nevertheless in the public interest that offers of settlement that do not comply with the Rules be given careful consideration, so that settlement of disputes is encouraged: see Ampezzo Pty Ltd and Franken [2009] WASAT 109 (S) (Ampezzo) at [37]. In Ampezzo at [38] and [39], the Tribunal referred (Page 10)
to the criteria relevant to the consideration of Calderbank offers under the practice of the Supreme Court of Western Australia and added the need, within the practice of the Tribunal, to have regard to the nature of the particular jurisdiction being exercised and the cost rules normally applied by the Tribunal to the particular type of case. Consequently, it is necessary to have regard to all of the following: a) the stage of the proceedings in which the offer was received; b) the time allowed for the offeree to consider the offer; c) the extent of the compromise offered; d) the offeree's prospects of success, assessed at the date of the offer; e) the clarity with which the terms of the offer was expressed; f) whether the offer foreshadowed an application for costs in the event of the offeree rejecting it; and g) the nature of the particular jurisdiction being exercised and the cost rules normally applied by the Tribunal to the particular type of case. 27 On an application of the factors referred to in a) and c) above, the nonacceptance of the offer of settlement dated 19 January 2009 was not unreasonable and should not form a basis for the award of costs. 28 No particular proceedings were foreshadowed as at 19 January 2009. It was not until 7 May 2009 that the respondent issued the notice of default and the applicant then took the initiative of commencing proceedings in the Tribunal. As reflected in the letter of 19 January 2009, there were other matters in issue, apart from the 24 hour trading dispute, which the offer did not address in any way. The offer followed an exchange of correspondence in which the respondent had put forward a proposal that the lease be varied to provide for an initial review of the rental to a market rent and thereafter for increases based on the consumer price index. A settlement on that basis would have resolved all of the accounting and record keeping issues relevant to a rent based on turnover. The offer of 19 January 2009 did no more than propose an increased percentage rate based on turnover which, therefore, did not address (Page 11)
any of these underlying issues. In any event, if it had been understood that proceedings were to be commenced in the Tribunal, the offer was made at far too early a stage for the respondent to be able to identify any potential risk of liability for costs in the proceedings.
Other bases on which costs may be awarded 29 The applicant put forward the above bases for the award of costs relying on the principles expressed in Pearce as summarised in Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135 at [20]. The applicant has also emphasised that it was substantially successful in the action and was vindicated in respect of the breaches alleged in the notice of default; and further, that the respondent preferred to have the proceedings transferred to the Supreme Court where costs would follow the event. Without more, these grounds would not be sufficient to justify an award of costs. 30 The respondent has opposed an award of costs, referring to decisions such as Summerville and Department of Education and Training & Ors [2006] WASAT 368 (Summerville), Vasilou v Australia's Country Homes Pty Ltd[1999] VSC 462, and Chew and Director General of the Department of Education and Training [2006] WASAT 248 (Chew), emphasising factors which have influenced the grant of an order for costs. Those circumstances have been conduct which has disadvantaged the other party, use of deception, unreasonably prolonging a matter, contumelious conduct, protracted failure to comply with procedural requirements, acting unreasonably or inappropriately or capriciously, or in a manner which constitutes an abuse of process. 31 It appears that both parties have read the Pearce decision too restrictively. The above passage at [24] commences with an endorsement of the approach explained by Barker J in Summerville. At [22] of Pearce, specific reference is made to the observation by Barker J in Summervillethat s 87 of the SAT Act does not identify factors to be taken into account by the Tribunal in exercising its jurisdiction under s 87(2), and that it is not appropriate for the Tribunal to attempt finally to delineate the particular circumstances in which the discretion to award costs will be exercised. 32 In Pearce, the approach in Summerville was seen at [24] as being consistent with the proposition that decisions on costs might serve to promote certainty and responsibility in parties to their contractual responsibilities. But the Tribunal held that this did not necessarily mean that costs will follow the event. What then follows is a broad illustration (Page 12)
of the approach which should be taken. Even where a party is forced to commence proceedings to vindicate its clear contractual entitlements, it is not stated that costs will follow the event but that it will 'often not be unreasonable for an award of costs to be made'. The passage which then follows in Pearce should be read in that light. Although each party should expect to pay their own costs in circumstances where there is a genuine dispute between the parties to a lease, that does not exclude the possibility of an award of costs. There need not be an expectation that each party will pay their own costs in the circumstances identified in Chew, namely where a party has conducted itself unreasonably or inappropriately. But even absent those circumstances, it is only the starting point that each party should expect to pay their own costs. This conveys that there may be circumstances in which the justice of the case supports moving away from that initial position. 33 This case, on any consideration, was complex and far from the ordinary commercial tenancy case run before the Tribunal. It required that the Tribunal have a proper understanding of the applicant's accounting and computer systems. The hearing of evidence took six hearing days and closing submissions a further full day, notwithstanding that both parties had filed comprehensive written submissions. The respondent sought, unsuccessfully, to have the matter transferred to the Supreme Court where costs are usually paid by an unsuccessful party. As between solicitor and client, the applicant has recorded legal costs, disbursements and expert witness fees of just less than $283,000 and claims some $213,000 on a party and party basis. The dispute was of great importance to the applicant because had the applicant not been successful, it could have resulted in the forfeiture of a lease which, with the exercise of options to extend, could be for a total term of 30 years, expiring in November 2025. 34 The dispute between the parties was a genuine one, their respective rights were unclear and it was appropriate to seek the determination of those rights before the Tribunal. The starting point consistent with s 87(1) of the SAT Act is that the parties should bear their own costs. However, given the factors referred to in the preceding paragraph and that the applicant is on any basis the successful party and has thereby avoided the risk of the notice of default being enforced, it would result in an injustice if an award of costs were not to be made, unless any other specific basis of opposition raised by the respondent in opposition to the award is made good. (Page 13)
35 In coming to this conclusion, we are mindful of, and have taken into account, the Tribunal's stringent approach to costs as outlined in J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S) (J & P Metals). As a result of that, and the level of costs which have been set in the Legal Practitioners (State Administrative Tribunal) Determination 2008 (2008 Determination), the costs recoverable in a case such as this will be very significantly lower than the solicitor and client costs incurred. As explained further below when discussing the manner in which the quantum of costs must be determined, the 2008 Determination is a guide to the maximum rates which might be allowed on a party and party basis. Those rates will usually be well below the solicitor and client rates agreed under a costs agreement. 36 It will be a rare case, which we consider this to be, which will justify an award of costs having regard to the above factors. The disparity between solicitor and client costs and the costs recoverable in the Tribunal will always operate as a disincentive for parties to allocate unnecessary resources and time to litigate in a manner which is inconsistent with the simplified and expeditious procedures which should be the paradigm in the Tribunal.
Other bases of opposition to the award of costs 37 The respondent contends that a considerable amount of time and effort was spent in the applicant endeavouring to demonstrate that Mr Clark should not have relied upon Audit Standard AUS904. It is true that some time was spent on this exercise but, at most, the applicant is only partly accountable. As appears at [86] of the substantive decision, Mr Clark endeavoured to explain some of the steps taken by him as part of an analytical procedure possibly justified under AS 520 analytical procedures. It was only later under crossexamination that Mr Clark disclosed that there had been what he referred to as an 'agreed to procedures audit'. It was reasonable for the applicant to examine very closely the degree of objectivity applied by Mr Clark. The various accounting standards had, in any event, to be considered in determining the scope of the audit and the extent to which it was justified to require the applicant to reconstruct its records to address the gross profit anomalies on some product lines (substantive decision at [89]). 38 It is noted that the applicant at para 9.2 of its written submissions has suggested, in the alternative, that if the Tribunal is not minded to include the applicant's costs relating to the time spent in pursuing the issue of good faith and unconscionable conduct, then an overall reduction of 10% (Page 14)
of the costs of getting up and trial attendance is submitted to be appropriate on the basis that the factual issues and legal arguments did not form a significant part of the work undertaken. The applicant's primary argument is that it was not unreasonable to raise this aspect of the case and therefore that the applicant should be entitled to the costs of doing so. Reliance is placed on Head and ZimmermannInvestments Pty Ltd[2009] WASAT 61 (S) at [12]. However, the Tribunal was there addressing why costs would not be awarded in relation to a particular issue. The case does not stand as authority for the proposition that costs should be allowed in respect of a claim on which a party fails. 39 There was inevitably some time spent in preparation and the drafting of the applicant's statement of issues, facts and contentions in relation to the good faith and unconscionable conduct issue, although little additional time was spent on the issue during the hearing because, to a large extent, the same evidence was in any event necessary to deal with other substantive issues. Also, some costs would have been spent on the issue in written and oral closing submissions. 40 We consider that any time spent in relation to the accounting standards issue and the good faith and unconscionable conduct issue is extremely difficult to measure. The most practicable way to approach this is to assess the total costs to which the applicant is entitled and then make a deduction equivalent to 5% of all fees, counsel's fees and witness fees. That is fairer than simply a deduction against costs of trial and getting up, because some time would have been spent on these issues at the other stages, to which we have referred, by the legal representatives and expert witnesses. It is unlikely that other disbursements were increased because of these issues, other than minimally, and they will accordingly not be reduced on this basis. 41 The respondent submits that significant time was also spent in arguing issues relating to the applicant's purported right to exercise an option to acquire the lessor's plant and equipment and that no costs should be awarded in relation to the time and cost spent in relation to that matter. This submission is not accepted. The Tribunal was informed that the issue was resolved at the commencement of the hearing and no time was spent on the issue. To the extent that time was spent on the issue in preparing the matter for hearing and in the preparation of statements of issues, facts and contentions, the matter having been resolved, that cost should form part of the costs in the cause. (Page 15)
42 Finally, the respondent contends that costs should not be awarded because of an offer to settle which was made by the respondent after the third day of the hearing. The offer was made in a letter dated 15 January 2010 which is marked without prejudice, save as to costs, and is therefore in a standard Calderbank form. It is, however, an offer which does not comply with the Rules, already referred to above, because it provided only three business days within which to respond. The respondent offered to withdraw its default notice and to cease the audit for the period 2001 through to 2006, which would not be reinstigated. It was the audit for the 2003, 2004 and 2005 financial years which was the subject of these proceedings. The respondent offered for the action to be discontinued, with each party paying their own costs, but left for further agreement the issue relating to trading hours. It was proposed that, if the parties could not reach agreement, then either party might seek a declaration from the Tribunal in relation to the interpretation of the lease provisions. 43 The applicant responded by email dated 22 January 2010 rejecting the offer and emphasising that there was no point in withdrawing the proceedings and then possibly having to commence fresh proceedings to resolve the 24 hour trading issue. Having regard to the criteria referred to in Ampezzo, as discussed above, it was not, in our view, unreasonable for the applicant to reject the offer. It would not have resolved the important issue concerning 24 hour trading. Given the breakdown in the relationship between the parties and the high level of suspicion which the respondent's representatives had concerning the applicant's accounting records, it is unlikely that a settlement of the 24 hour trading issue could have been negotiated. A previous attempt at mediation ordered by the Tribunal was unsuccessful. Without a determination from the Tribunal, the same issues were likely to arise in relation to the audit of subsequent years and the parties could have found themselves back in the same position. 44 For the above reasons, we conclude that costs should be awarded to the applicant, but those costs, including counsel and expert witness fees but not other disbursements, should be reduced by 5% to allow for the limited and difficult to measure time spent on the issues identified above in relation to which the applicant was unsuccessful.
The determination of the quantum of costs 45 It is necessary to address some additional issues raised to clarify the basis upon which the quantum of costs will be determined. (Page 16)
46 The respondent submits that the Tribunal must apply the 2008 Determination and that regard cannot be had to any other scale. The applicant has prepared the preliminary bill of costs by reference to the Supreme Court Scale of Costs 2008 set out in the table to the Legal Practitioners' (Supreme Court) (Contentious Business) Determination 2008 (Supreme Court Determination). The Supreme Court Determination came into effect on 1 July 2008 (Western Australia,GovernmentGazette 26 June 2008, at 2949 57) and continued in operation until 1 July 2010 (Western Australia, GovernmentGazette 29 June 2010, at 3044 50). In addition, on grounds of complexity and the amount of work done, the applicant contends that special orders should be made uplifting the scale. 47 As stated under Pt 3 reg 5 of the 2008 Determination, the 2008 Determination does not provide a scale of fees in respect of party and party costs. It sets a maximum allowable hourly rate and, in the case of counsel, a daily rate, as between solicitor and client. Accordingly, the 2008 Determination is no more than a guide to the Tribunal of the maximum which might be allowed on a party and party basis for an hourly or daily rate, as the case may be. Consequently, the comments made by the Tribunal in J & P Metals at [9] remain apposite, subject to recognition of the effect of the 2008 Determination which was not then in operation. It commenced on 1 March 2009 (Western Australia, Government Gazette 27 February 2009, at 511) and remained in force until its replacement by the Legal Practitioners' (State Administrative Tribunal) Report and Determination 2010 (Western Australia, Government Gazette 21 September 2010, at 4804) on 1 October 2010, and it therefore applies to the whole of the proceedings. The proceedings commenced on 28 May 2009 and the final hearing was on 9 April 2010. 48 In these circumstances, having regard to the complexity and importance of the matter to the parties, it is appropriate to use the Supreme Court Determination as an additional guide. However, as the task of the Tribunal will be to determine the amount of work which was reasonable and necessary, and to then apply an hourly or daily rate guided by the 2008 Determination, it is not necessary for any special orders to be made in relation to costs. 49 The respondent submits that if costs are awarded, then the costs should be taxed. It is assumed that by reference to taxation, the respondent means an assessment of costs pursuant to r 43 of the Rules, which contemplates a hearing at which an assessment of costs will be completed. The procedure usually followed provides the parties an (Page 17)
opportunity to make submissions and enables the Tribunal to assess the costs claimed and determine the amount in a relatively robust fashion. This is considered to be in the overall interests of the parties and consistent with the Tribunal's objectives under s 9 of the SAT Act, relevantly, to act with as little formality and technicality as is practicable and to minimise the cost to the parties. Before seeking to have the Tribunal assess the costs, the parties should endeavour to agree quantum in light of the observations in these reasons. 50 It may be, in this case, that the parties have overlooked the intention of the Tribunal as explained in the substantive decision, and have made all the submissions which they intended to make in relation to the quantum of costs. In the circumstances, if quantum is not agreed, the applicant will be provided with an opportunity to provide a final bill of costs, if that is intended, and both parties will be provided with an opportunity to make further submissions in relation to the quantum of costs, should they wish to do so. If the applicant does not file and serve a final bill of costs and if neither party files and serves any further submissions, the costs will be assessed on the material currently before the Tribunal.
Orders 51 For the above reasons, the Tribunal will issue orders as follows: 1. The respondent is to pay 95% of the applicant's costs including counsel's fees and expert witness fees plus the full amount of all other disbursements which may be allowed in respect of the proceedings, to be assessed as provided below, if not agreed. 2. The applicant must, on or before 9 December 2010 notify the Tribunal by letter if it wishes to have its costs assessed, and if so, pay the fees for assessment provided for in reg 9 of the State Administrative Tribunal Regulations 2004 (WA) and file and serve: 3. The respondent must, on or before 23 December 2010 file and serve any further written submissions on which the (Page 18)
respondent wishes to rely opposing the quantum of costs claimed. 4. Subject to further order of the Tribunal, the costs issue shall be finalised on the documents. |